EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF FEBRUARY 1, 1999
BETWEEN
TIC ACQUISITION LLC,
a Delaware limited
liability company,
AND
IRVINE APARTMENT COMMUNITIES, INC.,
a Maryland corporation
TABLE OF CONTENTS
Page
----
ARTICLE I. THE MERGER..................................................... 1
1.1. The Merger........................................................ 1
1.2. Closing........................................................... 1
1.3. Effective Time.................................................... 2
1.4. Effects of the Merger............................................. 2
1.5. Certificate of Formation and Limited Liability Company Agreement.. 2
1.6. Bylaws............................................................ 2
1.7. Officers of Surviving Entity...................................... 2
1.8. Tax Treatment..................................................... 2
ARTICLE II. EFFECT OF THE MERGER ON THE OWNERSHIP INTERESTS IN
THE CONSTITUENT ENTITIES....................................... 3
2.1. Effect on Company Stock........................................... 3
2.2. Acquiror Interests................................................ 3
2.3. Company Options and Restricted Stock Units........................ 3
2.4. Surrender and Payment............................................. 4
ARTICLE III. REPRESENTATIONS AND WARRANTIES................................. 6
3.1. Representations and Warranties of the Company..................... 6
3.2. Representations and Warranties of Acquiror........................19
ARTICLE IV. CONDUCT OF BUSINESS PENDING THE MERGER.........................21
4.1. Covenants of the Company..........................................21
4.2. Advice of Changes; Government Filings.............................24
ARTICLE V. ADDITIONAL AGREEMENTS..........................................25
5.1. Preparation of Schedule 13E-3 and Proxy Statement; the
Company Stockholders Meeting......................................25
5.2. Access to Information.............................................26
5.3. Approvals and Consents; Cooperation...............................26
5.4. Stock Options and Restricted Stock................................27
5.5. Acquisition Proposals.............................................27
5.6. [Intentionally Omitted]...........................................29
5.7. Withholding/Foreign Persons.......................................29
5.8. Public Announcements..............................................29
5.9. Director and Officer Liability....................................29
5.10. Payment of Dividends..............................................29
5.11. Further Assurances................................................30
ARTICLE VI. CONDITIONS PRECEDENT............................................30
6.1. Conditions to Each Party's Obligation to Effect the Merger........30
6.2. Additional Conditions to Obligations of Acquiror..................30
6.3. Additional Conditions to Obligations of the Company...............31
ARTICLE VII. TERMINATION AND AMENDMENT......................................32
7.1. Termination.......................................................32
7.2. Expenses..........................................................33
7.3. Effect of Termination.............................................35
7.4. Amendment.........................................................35
7.5. Extension; Waiver.................................................35
ARTICLE VIII. GENERAL PROVISIONS............................................36
8.1. Non-Survival of Representations, Warranties and Agreements;
No Other Representations and Warranties...........................36
8.2. Notices...........................................................36
8.3. Interpretation....................................................36
8.4. Counterparts......................................................37
8.5. Entire Agreement; No Third Party Beneficiaries....................37
8.6. Governing Law.....................................................37
8.7. Severability......................................................37
8.8. Assignment........................................................38
8.9. Enforcement.......................................................38
8.10. Definitions.......................................................38
GLOSSARY OF DEFINED TERMS
Location of
Definition Defined Term
Acquisition Proposal.............................................Section 5.5
Acquiror............................................................Preamble
Affiliate.......................................................Section 8.10
Agreement...........................................................Preamble
Alternative Transaction......................................Section 7.2.(e)
Articles of Merger...............................................Section 1.3
Board of Directors..............................................Section 8.10
Break-Up Fee..................................................Section 7.2(f)
Business Day....................................................Section 8.10
Certificate of Merger............................................Section 1.3
Certificates..................................................Section 2.4(b)
Closing..........................................................Section 1.2
Closing Date.....................................................Section 1.2
Code.......................................................Section 3.1(i)(i)
Company.............................................................Preamble
Company Affiliate...............................................Section 8.10
Company Benefit Plans......................................Section 3.1(n)(i)
Company Common Stock................................................Recitals
Company Disclosure Letter.......................................Section 8.10
Company Permits...............................................Section 3.1(g)
Company Properties............................................Section 3.1(k)
Company Stock Option Plans......................................Section 8.10
Company Stockholders Meeting..................................Section 5.1(c)
Company Sub.....................................................Section 8.10
DLLCA...............................................................Recitals
Effective Time...................................................Section 1.3
Encumbrances..................................................Section 3.1(k)
Environmental Laws............................................Section 3.1(l)
ERISA......................................................Section 3.1(n)(i)
Exchange Act.............................................Section 3.1(d)(iii)
Exchange Agent................................................Section 2.4(a)
Expenses......................................................Section 7.2(a)
GAAP.......................................................Section 3.1(e)(i)
Governmental Entity......................................Section 3.1(d)(iii)
HSR Act...................................................Section 3.1(d)(ii)
Indebtedness..............................................Section 3.1(m)(ii)
IRS........................................................Section 3.1(n)(i)
Knowledge.......................................................Section 8.10
Liens.....................................................Section 3.1(c)(ii)
Maryland Department..............................................Section 1.3
Matching Transaction..........................................Section 5.5(b)
Material Adverse Effect.........................................Section 8.10
Material Contract..........................................Section 3.1(m)(i)
Merger..............................................................Recitals
Merger Consideration.............................................Section 2.1
MGCL................................................................Recitals
Non-Employee Option...........................................Section 2.3(b)
NYSE.....................................................Section 3.1(d)(iii)
OP.........................................................Section 3.1(e)(i)
OP Units........................................................Section 8.10
Option.....................................................Section 3.1(n)(v)
Organizational Documents........................................Section 8.10
Outside Date..................................................Section 7.1(b)
Person..........................................................Section 8.10
Property Restrictions.........................................Section 3.1(k)
Proxy Statement...............................................Section 5.1(b)
REIT......................................................Section 3.1(i)(ii)
Required Company Votes..........................................Section 8.10
Required Regulatory Approvals...................................Section 8.10
Restricted Stock Unit Agreement...........................Section 3.1(n)(vi)
Retention Agreement...........................................Section 2.3(a)
Schedule 13E-3................................................Section 5.1(a)
SEC...........................................................Section 3.1(a)
SEC Reports................................................Section 3.1(e)(i)
Securities Act.............................................Section 3.1(e)(i)
Special Committee...................................................Recitals
Stock Option Agreement.....................................Section 3.1(n)(v)
Subsidiary......................................................Section 8.10
Superior Proposal.............................................Section 5.5(b)
Surviving Entity.................................................Section 1.1
Tax.............................................................Section 8.10
Taxable.........................................................Section 8.10
Taxes...........................................................Section 8.10
Tax Return......................................................Section 8.10
Terminating Acquiror Breach...................................Section 7.1(h)
Terminating Company Breach....................................Section 7.1(g)
The other party.................................................Section 8.10
Third Party.....................................................Section 8.10
TIC...........................................................Section 3.1(q)
Trust......................................................Section 3.1(e)(i)
Trust Shares....................................................Section 8.10
Violation.................................................Section 3.1(d)(ii)
This AGREEMENT AND PLAN OF MERGER, dated as of February 1, 1999
(this "Agreement"), by and between TIC Acquisition LLC, a Delaware limited
liability company ("Acquiror"), and Irvine Apartment Communities, Inc., a
Maryland corporation (the "Company").
W I T N E S S E T H :
WHEREAS, (i) each of the Board of Directors of the Company and
a special committee thereof comprised entirely of non-management independent
directors not affiliated with the Acquiror or any of its Affiliates (the
"Special Committee") has determined that the Merger (as defined below) is
advisable and in the best interests of its stockholders and (ii) each of the
Board of Directors of the Company, the Special Committee and the Managing
Member of Acquiror have approved the Merger upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
share of Common Stock, par value $.01 per share, of the Company ("Company
Common Stock") will be converted into the right to receive cash;
WHEREAS, in order to effectuate the foregoing, the Company,
upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware Limited Liability Company Act (the "DLLCA") and
the Maryland General Corporation Law (the "MGCL"), will merge with and into
Acquiror (the "Merger"); and
WHEREAS, Acquiror and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I.
THE MERGER
1.1. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DLLCA and the MGCL,
the Company shall be merged with and into Acquiror at the Effective Time (as
defined below). Following the Merger, the separate corporate existence of the
Company shall cease and Acquiror shall continue as the surviving entity
(hereinafter sometimes called the "Surviving Entity") in accordance with the
DLLCA and the MGCL.
1.2. Closing. The closing of the Merger (the "Closing") will
take place on the second Business Day after satisfaction or waiver (as
permitted by this Agreement and applicable law) of the conditions (excluding
conditions that, by their terms, cannot be satisfied until the Closing Date)
set forth in Article VI (the "Closing Date"), unless another time or date is
agreed to in writing by the parties hereto. The Closing shall be held at the
offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, unless another place is agreed to in writing by the parties
hereto.
1.3. Effective Time. Upon the Closing, the parties shall (i)
file with the Secretary of State of the State of Delaware a certificate of
merger or other appropriate documents (in any such case, the "Certificate of
Merger") executed in accordance with the relevant provisions of the DLLCA,
(ii) file with the Maryland State Department of Assessments and Taxation (the
"Maryland Department") the articles of merger or other appropriate documents
(in any such case, the "Articles of Merger") executed in accordance with the
relevant provisions of the MGCL and (iii) make all other filings, recordings
or publications required under the DLLCA and MGCL in connection with the
Merger. The Merger shall become effective at 5:00 p.m., New York City time,
on the later of the date of (i) the filing of the Certificate of Merger with
the Delaware Secretary of State in accordance with the DLLCA and (ii) the
filing of the Articles of Merger with, and the acceptance for record of such
Articles of Merger by, the Maryland Department in accordance with the MGCL, or
at such other time as the parties may agree and specify in such filings in
accordance with applicable law (the time the Merger becomes effective being
the "Effective Time").
1.4. Effects of the Merger. At the Effective Time, Acquiror
shall continue in existence as the Surviving Entity, and without further
transfer, succeed to and possess all of the rights, privileges and powers of
the Company, and all of the assets and property of whatever kind and character
of the Company shall vest in Acquiror without further act or deed; thereafter,
Acquiror, as Surviving Entity, shall be liable for all of the liabilities and
obligations of the Company (including the Retention Agreements), and any claim
or judgment against the Company may be enforced against Acquiror, as the
Surviving Entity, in accordance with the DLLCA and the MGCL. At and after the
Effective Time, the Merger will have the effects set forth in the DLLCA and
the MGCL.
1.5. Certificate of Formation and Limited Liability Company
Agreement. The certificate of formation and limited liability company
agreement of Acquiror as in effect immediately prior to the Effective Time
shall be the certificate of formation and limited liability company agreement
of Surviving Entity until thereafter changed or amended as provided therein or
by applicable law.
1.6. Bylaws. The bylaws of Acquiror as in effect at the
Effective Time shall be the bylaws of the Surviving Entity until thereafter
changed or amended as provided therein or by applicable law.
1.7. Officers of Surviving Entity. The officers of Acquiror
shall be the officers of the Surviving Entity, until the earlier of their
resignation or removal or otherwise ceasing to be an officer or until their
respective successors are duly appointed and qualified, as the case may be.
1.8. Tax Treatment. The parties intend that, for United States
federal and applicable state income tax purposes, the Merger shall be treated
as if the Company had transferred all of its assets and liabilities to
Acquiror in a taxable transaction in exchange for the Merger Consideration and
then completely liquidated. Acquiror and the Company shall each report the
Merger for federal and applicable state income tax purposes consistently with
the above described treatment.
ARTICLE II.
EFFECT OF THE MERGER ON THE OWNERSHIP INTERESTS
IN THE CONSTITUENT ENTITIES
2.1. Effect on Company Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock, each issued and outstanding share of Company
Common Stock shall be converted into the right to receive $34.00 in cash,
without interest (the "Merger Consideration"). As of the Effective Time, all
shares of Company Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares of Company Common Stock
shall cease to have any rights with respect thereto, except the right to
receive, upon the surrender of such certificates, the Merger Consideration.
2.2. Acquiror Interests. At and after the Effective Time, each
membership interest in Acquiror issued and outstanding immediately prior to
the Effective Time shall remain an issued and outstanding membership interest
in Acquiror and shall not be affected by the Merger. Each membership interest
in Acquiror that is issued but not outstanding shall remain an issued but not
outstanding membership interest in Acquiror and shall not be affected by the
Merger.
2.3. Company Options and Restricted Stock Units.
(a) The Company shall take all actions necessary to assure
that, prior to the Effective Time, each Option (other than the Options
referred to subsection 2.3(b)) and each Restricted Stock Unit Agreement (and
any dividend equivalents relating thereto) (and each right to any award under
any Company Stock Option Plan) shall be canceled in accordance with the terms
of the letter agreement dated as of January 22, 1999 between the Company and
the holder thereof (a "Retention Agreement").
(b) The Company shall take all actions necessary to assure
that, prior to the Effective Time, each outstanding Option (i) under the
Company's 1993 Stock Option Plan for Directors or (ii) held by ▇▇▇▇▇ ▇▇▇▇ (a
"Non-Employee Option"), whether or not then exercisable or vested, shall be
canceled, and, in consideration of such cancellation, the Company shall pay
the holder of such Non-Employee Option an amount in cash in respect thereof
equal to the product of (x) the excess (if any) of the Merger Consideration
over the exercise price thereof, and (y) the number of shares of Company
Common Stock with respect to which such Non-Employee Option is then
exercisable and vested (such payment to be net of withholding taxes applicable
thereto). Each Non-Employee Option shall be canceled with respect to all
shares of Company Common Stock subject to such Non-Employee Option,
including shares of Company Common Stock with respect to which such Non-
Employee Option is not then exercisable or vested.
(c) The Company shall take all actions necessary to assure
that, on and after the date of this Agreement, (i) no awards are granted under
any Company Stock Option Plan, (ii) except as provided in the Retention
Agreements, no Option or Restricted Stock Unit Agreement (or any dividend
equivalents relating thereto) is amended, modified or terminated, and (iii)
except as provided in the Retention Agreements, no other actions are taken
that accelerate the vesting or exercisability of any Option or Restricted Stock
Unit Agreement (or any dividend equivalents relating thereto) or otherwise
change the rights of the holder of any Option or Restricted Stock Unit
Agreement (or any dividend equivalents relating thereto), and (iv) that there
are no options, warrants or other rights to acquire stock from the Company
(other than the Options and Restricted Stock Unit Agreements (and dividend
equivalents relating thereto) set forth on Schedules 3.1(n)(v) and 3.1(n)(vi)
to the Company Disclosure Letter.
2.4. Surrender and Payment.
(a) Exchange Agent. Prior to the Effective Time, pursuant to an
agreement in form and substance reasonably acceptable to the Special Committee,
Acquiror shall appoint an agent, who shall be reasonably acceptable to the
Special Committee (the "Exchange Agent"), for the purpose of exchanging
certificates representing shares of Company Common Stock for the Merger
Consideration. Acquiror will make available to the Exchange Agent, as needed,
the Merger Consideration (in immediately available funds) to be paid in
respect of the shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder of
record of a certificate or certificates (the "Certificates") which immediately
prior to the Effective Time represented outstanding shares of Company Common
Stock (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in such form
and have such other provisions as Acquiror may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Acquiror, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required by the
Exchange Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration, without interest thereon, and the
Certificate so surrendered shall forthwith be canceled. If any portion of the
Merger Consideration is to paid to a Person other than the registered holder
of the shares represented by the Certificate or Certificates surrendered in
exchange therefor, it shall be a condition to such payment that the
Certificate or Certificates so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the Person requesting such
payment shall pay to the Exchange Agent any transfer or other taxes required
as a result of such payment to a Person other than the registered holder of
such shares of Company Common Stock or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable. Until
surrendered as contemplated by this Section 2.4, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration.
(c) No Further Ownership Rights in Company Common Stock. All
Merger Consideration paid upon the surrender for exchange of Certificates in
accordance with the terms of this Article II shall be deemed to have been paid
in full satisfaction of all rights pertaining to the shares of Company Common
Stock theretofore represented by such Certificates, subject, however, to the
Surviving Entity's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have
been declared or made by the Company on such shares of Company Common Stock
(i) on or after the date of this Agreement in a manner that does not violate
the terms of this Agreement or (ii) prior to the date of this Agreement and
which, in either case, remain unpaid at the Effective Time, and, from and
after the Effective Time, there shall be no further registration of transfers
on the stock transfer books of the Surviving Entity of the shares of Company
Common Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Entity or the Exchange Agent for any reason, they shall be canceled and
exchanged as provided in this Article II, except as otherwise provided by law.
(d) Unclaimed Funds. Any portion of the Merger Consideration
made available to the Exchange Agent pursuant to Section 2.4(a) that remains
unclaimed by holders of the Certificates for six months after the Effective
Time shall be delivered to Acquiror, upon demand, and any holders of
Certificates who have not theretofore complied with this Article II shall
thereafter look only to Acquiror for payment of their claim for Merger
Consideration.
(e) No Liability. None of Acquiror, the Company or the
Exchange Agent shall be liable to any Person in respect of any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates shall not
have been surrendered prior to seven years after the Effective Time or
immediately prior to such earlier date on which any Merger Consideration in
respect of such Certificate would otherwise escheat to or become the property
of any Governmental Entity (as defined below), any such Merger Consideration
in respect of such Certificate shall, to the extent permitted by applicable
law, become the property of the Surviving Entity, free and clear of all claims
or interest of any Person previously entitled thereto.
(f) Investment of Funds. The Exchange Agent shall invest any
Merger Consideration made available to the Exchange Agent pursuant to Section
2.4(a), as directed by Acquiror, on a daily basis. Any interest and other
income resulting from such investments shall be paid to Acquiror.
(g) Lost Certificates. In the event that any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by Acquiror, the posting by such Person of a bond in such
reasonable amount as Acquiror may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration with respect to such Certificate, to which such Person is
entitled pursuant hereto.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of the Company. The Company
represents and warrants to Acquiror as follows:
(a) Organization, Standing and Power. The Company has been duly
incorporated and is validly existing and in good standing under the laws of
the State of Maryland. The Company is duly qualified and in good standing to
do business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to so qualify would not, either individually or in
the aggregate, have a Material Adverse Effect on the Company. The copies of
the Organizational Documents of the Company filed with the Securities and
Exchange Commission (the "SEC") are true, complete and correct copies of such
documents as amended and in effect on the date of this Agreement.
(b) Company Subsidiaries. Schedule 3.1(b) to the Company
Disclosure Letter sets forth each Subsidiary of the Company and the ownership
interest therein of the Company. Each Company Sub that is a corporation is
duly incorporated and validly existing under the laws of its jurisdiction of
incorporation and has the requisite corporate power and authority to carry on
its business as now being conducted. Each of the Company Subs that is a
partnership, limited partnership, limited liability company or trust is duly
organized and validly existing under the laws of its jurisdiction of
organization and has the requisite power and authority to carry on its
business as now being conducted. Each Company Sub is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed would not, either
individually or in the aggregate, have a Material Adverse Effect on the
Company. True, complete and correct copies of the partnership agreement and
trust declaration, as applicable, of the Company Subs, each as amended to the
date of this Agreement, have been previously delivered or made available to
Acquiror.
(c) Capital Structure.
(i) As of the date of this Agreement, the authorized
stock of the Company consists of (A) 150,000,000 shares of Company
Common Stock, of which 20,163,642 shares are outstanding, (B)
160,000,000 shares of excess stock, par value $.01 per share, of which
no shares are outstanding, and (C) 10,000,000 shares of preferred
stock, par value $1.00 per share, of which no shares are outstanding.
All issued and outstanding shares of stock of the Company are duly
authorized, validly issued, fully paid and nonassessable, and, except
as disclosed in Schedule 3.1(c)(i) to the Company Disclosure Letter,
no class of stock of the Company is entitled to preemptive rights. As
of the date of this Agreement, there are no outstanding options,
warrants or other rights to acquire stock from the Company other than
(1) Options representing in the aggregate the right to purchase
671,333 shares of Company Common Stock under the Company Stock Option
Plans, (2) Restricted Stock Units outstanding under the Company Stock
Plans which may, in the Company's discretion, be settled by the
delivery of an aggregate of 202,000 shares of Company Common Stock
granted under the Company Stock Option Plans, and (3) as set forth on
Schedule 3.1(c)(i) to the Company Disclosure Letter. There are no
stock appreciation rights relating to the stock of the Company.
Except as disclosed in Schedule 3.1(c)(i) to the Company Disclosure
Letter, as of the date of this Agreement, no bonds, debentures, notes
or other indebtedness of the Company having the right to vote on any
matters on which stockholders may vote are issued or outstanding.
(ii) Schedule 3.1(c)(ii) to the Company Disclosure
Letter sets forth the equity ownership of each Company Sub (it being
understood that such representation with respect to securities held by
any entity other than the Company or any Company Sub is made only to
the extent of the Knowledge of the Company). Except as set forth on
Schedule 3.1(c)(ii) to the Company Disclosure Letter, (A) all of the
outstanding shares of stock of each Company Sub that is a corporation
have been duly authorized, validly issued, fully paid and
nonassessable, and are owned by the Company free and clear of all
liens, claims, encumbrances, restrictions, preemptive rights or any
other claims of any thirty party ("Liens") and (B) all equity
interests in each Company Sub that is a partnership, limited
partnership, joint venture, limited liability company or trust are
owned by the Company or one or more Company Subs free and clear of all
Liens. Except as set forth on Schedule 3.1(c)(ii) to the Company
Disclosure Letter, there are no outstanding options, warrants or other
rights to acquire ownership interests from the Company Subs. Except
as disclosed in Schedule 3.1(c)(ii) to the Company Disclosure Letter,
as of the date of this Agreement, no bonds, debentures, notes or other
indebtedness of the Company Subs having the right to vote on any
matters on which holders of equity in the Company Subs are entitled to
vote are issued or outstanding.
(iii) Except as otherwise set forth in this Section
3.1(c) or in Schedule 3.1(c)(i) or 3.1(c)(ii) to the Company
Disclosure Letter, as of the date of this Agreement, there are no
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or the
Company Subs is a party or by which any of them is bound obligating
the Company or the Company Subs to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of stock or other
voting securities of the Company or the Company Subs or obligating the
Company or the Company Subs to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. As of the date of this Agreement, other
than as set forth in Schedule 3.1(c)(i) or 3.1(c)(ii) to the Company
Disclosure Letter, there are no outstanding obligations of the Company
or the Company Subs to repurchase, redeem or otherwise acquire any
shares of stock of the Company or shares of stock or other ownership
interests of the Company Subs.
(d) Authority; No Conflicts.
(i) The Company has all requisite corporate power and
corporate authority to enter into this Agreement and, subject to the
adoption of this Agreement by the requisite vote of the holders of
Company Common Stock, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the
Company, subject in the case of the consummation of the Merger to the
approval of this Agreement by the stockholders of the Company. This
Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding agreement of the Company, enforceable
against it in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors generally
and by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(ii) Except as set forth in Schedule 3.1(d)(ii) to the
Company Disclosure Letter, the execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated hereby will not, conflict with, or result in any
violation of, or constitute a default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination,
amendment, cancellation or acceleration of any obligation or the loss
of a material benefit under, or the creation of a lien, pledge,
security interest, charge or other encumbrance on any assets (any such
conflict, violation, default, right of termination, amendment,
cancellation or acceleration, loss or creation, a "Violation")
pursuant to: (A) any provision of the Organizational Documents of the
Company or the Company Subs or (B) except as would not have a Material
Adverse Effect on the Company and, subject to obtaining or making the
consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (iii) below, any
loan or credit agreement, note, mortgage, bond, indenture, lease,
benefit plan or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company, the Company
Subs or their respective properties or assets.
(iii) No consent, approval, order or authorization of,
or registration, declaration or filing with, any supranational,
national, state, municipal or local government, any instrumentality,
subdivision, court, administrative agency or commission or other
authority thereof, or any quasi-governmental or private body
exercising any regulatory, taxing, or other governmental or quasi-
governmental authority (a "Governmental Entity"), is required by or
with respect to the Company or the Company Subs in connection with the
execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby,
except for (x) those required under or in relation to (A) the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (B)
the DLLCA and the MGCL with respect to the filing and recordation of
appropriate merger documents, (C) the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and (D) rules and
regulations of the New York Stock Exchange (the "NYSE"), and (y) such
consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or obtain would
not, individually or in the aggregate, have a Material Adverse Effect
on the Company.
(e) Reports and Financial Statements.
(i) Each of the Company, Irvine Apartment Communities,
L.P., a Delaware limited partnership (the "OP"), and IAC Capital
Trust, a Delaware business trust (the "Trust"), has filed all required
reports, schedules, forms, statements and other documents required to
be filed by it with the SEC since, in each case, the later of (i)
January 1, 1996 and (ii) its formation (collectively, including all
exhibits thereto, the "SEC Reports"). No other Company Sub is
required to file any form, report or other document with the SEC.
None of the SEC Reports, as of their respective dates (and, if amended
or superseded by a filing prior to the date of this Agreement or of
the Closing Date, then on the date of such filing), contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were
made, not misleading. Each of the financial statements (including the
related notes) included in the SEC Reports presents fairly, in all
material respects, (i) the consolidated financial position and
consolidated results of operations and cash flows of the Company and
the OP and (ii) the financial position and results of operations and
cash flows of the Trust, as of the respective dates or for the
respective periods set forth therein, all in conformity with United
States generally accepted accounting principles ("GAAP") consistently
applied during the periods involved except as otherwise noted therein,
and subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments that have not been and are
not expected to be material in amount. All of such SEC Reports, as of
their respective dates (and as of the date of any amendment to the
respective SEC Report), complied as to form in all material respects
with the applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act and the rules and
regulations promulgated thereunder.
(ii) Except for liabilities and obligations referred
to in any of the SEC Reports (including, without limitation, the
financial statements included therein) filed prior to the date of this
Agreement, and except for liabilities and obligations incurred in the
ordinary course of business since September 30, 1998, neither the
Company nor any Company Sub has any liabilities or obligations of any
nature which, individually or in the aggregate, would have a Material
Adverse Effect on the Company.
(f) Schedule 13E-3; Proxy Statement.
(i) None of the information supplied or to be supplied
by the Company for inclusion or incorporation by reference in the
Schedule 13E-3 (except for information about Acquiror or any of its
Affiliates) will, on the date the Schedule 13E-3 is first mailed to
the Company's stockholders or at the time of the Company Stockholders
Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. If at any time prior to
the Effective Time any event with respect to the Company should occur
and is required to be described in an amendment of, or a supplement
to, the Schedule 13E-3, the Company shall promptly furnish Acquiror
with a description of such event. For purposes of this subsection
3.1(f)(i), any statement which is made or incorporated by reference in
the Schedule 13E-3 shall be deemed modified or superseded to the
extent any later filed document incorporated by reference in the
Schedule 13E-3 or any statement included in the Schedule 13E-3
modifies or supersedes such earlier statement.
(ii) None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in
the Proxy Statement (except for information about Acquiror or any of
its Affiliates furnished by Acquiror or any of its Affiliates to the
Company) will, on the date the Proxy Statement is first mailed to the
Company's stockholders or at the time of the Company Stockholders
Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. If at any time prior to
the Effective Time any event (other than an event with respect to the
Acquiror or any of its Affiliates) should occur and is required to be
described in an amendment of, or a supplement to, the Proxy Statement,
such event shall be so described, and such amendment or supplement
shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of the Company. If at any time prior
to the Effective Time any event with respect to the Acquiror or any of
its Affiliates should occur and is required to be described in an
amendment of, or a supplement to, the Proxy Statement, upon receipt of
a description of such event from Acquiror or any of its Affiliates,
such amendment or supplement shall be promptly filed by the Company
with the SEC and, as required by law, disseminated to the stockholders
of the Company. The Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the
rules and regulations of the SEC thereunder. For purposes of this
subsection 3.1(f)(ii), any statement which is made or incorporated by
reference in the Proxy Statement shall be deemed modified or
superseded to the extent any later filed document incorporated by
reference in the Proxy Statement or any statement included in the
Proxy Statement modifies or supersedes such earlier statement
(g) Compliance with Applicable Laws; Regulatory Matters.
Except as disclosed in any of the SEC Reports, the Company and the Company
Subs hold, and are in compliance with the terms of, all permits, licenses,
certificates, franchises, registrations, variances, exemptions, orders and
approvals of all Governmental Entities which are material to the operation of
their businesses, taken as a whole (the "Company Permits"), except where the
failure so to hold or comply, individually or in the aggregate, would not have
a Material Adverse Effect on the Company. Except as disclosed in any of the
SEC Reports, the businesses of the Company and the Company Subs are not being
and have not been conducted in violation of any law, ordinance, regulation,
judgment, decree, injunction, rule or order of any Governmental Entity, except
for violations which, individually or in the aggregate, would not have a
Material Adverse Effect on the Company. As of the date of this Agreement,
except as disclosed in any SEC Report, no investigation by any Governmental
Entity with respect to the Company or the Company Subs is pending or, to the
Knowledge of the Company, threatened, other than investigations which,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company.
(h) Litigation. Except as disclosed in any of the SEC Reports
or in Schedule 3.1(h) to the Company Disclosure Letter, there is no
litigation, arbitration, claim, suit, action, investigation or proceeding
pending (it being understood that such representation with respect to any
litigation, arbitration, claim, suit, action, investigation or proceeding
being handled by representatives of the Acquiror or its Affiliates on behalf of
the Company is made only to the extent of the Knowledge of the Company) or, to
the Knowledge of the Company, threatened, against or affecting the Company or
the Company Subs which, individually or in the aggregate, would have a
Material Adverse Effect on the Company, nor is there any judgment, award,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or the Company Subs which, individually or in
the aggregate, would have a Material Adverse Effect on the Company. As of the
date hereof, except as set forth in Schedule 3.1(h) to the Company Disclosure
Letter, (i) there is no litigation, arbitration, claim, suit, action,
investigation or proceeding pending against or affecting the Company or its
Directors relating to this Agreement or the transactions contemplated hereby,
and (ii) to the Knowledge of the Company, there is no injunction, judgment,
order, decree, ruling or charge in effect against the Company, any of the
Directors of the Company or any Company Sub which would (A) prevent
consummation of any of the transactions contemplated by this Agreement, (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, or (C) materially adversely affect the right of
Acquiror or any of its Subsidiaries to own its or the Company's or any Company
Sub's assets and to operate its or the Company's or any Company Sub's
businesses (and no such injunction, judgment, order, decree, ruling or charge
shall be in effect).
(i) Taxes.
(i) Each of the Company and each Company Sub has (A)
filed on a timely basis all Tax Returns required to be filed by it
(after giving effect to any filing extension properly granted by a
Governmental Entity having authority to do so) and all such Tax
Returns are accurate and complete in all material respects; and (B)
paid (or the Company has paid on its behalf) all Taxes shown on such
returns and reports as required to be paid by it, and, except as
disclosed in any of the SEC Reports or in Schedule 3.1(i)(i) to the
Company Disclosure Letter, the most recent financial statements
contained in any of the SEC Reports reflect an adequate reserve for
all material Taxes payable by the Company (and by those Company Subs
whose financial statements are contained therein) for all taxable
periods and portions thereof through the date of such financial
statements. The accruals and reserves for Taxes (including deferred
Taxes) reflected in the books and records of the Company (and such
Company Subs) as of the last day of the Company's most recently
completed fiscal month end are in all material respects adequate to
cover Taxes required to be accrued through such date (including Taxes
being contested) in accordance with GAAP applied on a consistent basis
with the financial statements contained in any of the SEC Reports.
True, correct and complete copies of all federal, state, local and
foreign Tax Returns for the Company and each Company Sub, and all
written communications relating thereto, have been delivered or made
available to representatives of Acquiror. Since January 1, 1998, the
Company has not incurred and does not expect to incur any liability
for taxes under Section 857(b), 860(c) or 4981 of the Internal Revenue
Code of 1986, as amended (the "Code"), and neither the Company nor any
Company Sub has incurred any material liability for Taxes other than
in the ordinary course of business. The Company has not elected and
will not elect to pay tax on any capital gain recognized on or after
January 1, 1998, including but not limited to gain recognized as a
result of the Merger. To the Knowledge of the Company, no event has
occurred, and no condition or circumstance exists, which presents a
material risk that any material Tax described in the preceding two
sentences will be imposed upon the Company. Except as set forth on
Schedule 3.1(i)(i) to the Company Disclosure Letter, to the Knowledge
of the Company, no deficiencies for any Taxes have been proposed,
asserted or assessed against the Company or any of the Company Subs,
and no requests for waivers of the time to assess any such Taxes are
pending. To the Knowledge of the Company, Schedule 3.1(i)(i) to the
Company Disclosure Letter sets forth (i) the taxable years of the
Company and the Company Subs as to which the respective statutes of
limitations for assessment of federal, state and foreign income or
franchise Taxes have not expired, and (ii) with respect to such
taxable years, those years for which examinations have been completed,
those years for which examinations are presently being conducted,
those years for which examinations have not yet been initiated and
those years for which extensions to file Tax Returns have been
requested and such Tax Returns have not yet been filed.
(ii) The Company (A) for all taxable years commencing
with 1993 through the most recent December 31, has been subject to
taxation as a real estate investment trust (a "REIT") within the
meaning of the Code and has satisfied all requirements to qualify as a
REIT for such years, (B) has operated, and will continue to operate,
in such a manner as to qualify as a REIT for the tax year ending upon
the Closing Date, and (C) has not taken or omitted to take any action
which would reasonably be expected to result in a challenge to its
status as a REIT, and to the Company's Knowledge, no such challenge is
pending or threatened. The OP and each other Company Sub that is a
partnership has been since its formation and continues to be treated
for federal income tax purposes as a partnership and not as a
corporation or an association or publicly traded partnership taxable
as a corporation. The Trust (W) for its taxable year ended December
31, 1998 has been organized and has operated in conformity with the
requirements for REIT qualification under the Code, (X) will, in a
timely fashion, elect to be treated as a REIT for the taxable year
ended December 31, 1998, (Y) during the portion of its taxable year
from January 1, 1999 through the date hereof has been organized and
has operated, and through the Closing Date will continue to be
organized and to operate, in conformity with the requirements for REIT
qualification under the Code, and (Z) has not taken or omitted to take
any action which would reasonably be expected to result in a challenge
to its status as a REIT and, to the Company's Knowledge, no such
challenge is pending or threatened. Each other Company Sub has been
since its formation, and continues to be treated for federal income
tax purposes as a "qualified REIT subsidiary" as defined in Section
856(i) of the Code. To the Knowledge of the Company, neither the
Company nor any Company Sub holds any asset (A) the disposition of
which would be subject to rules similar to Section 1374 of the Code as
a result of an election under IRS Notice 88-19 or (B) that is subject
to a consent filed pursuant to Section 341(f) of the Code and the
regulations thereunder.
(j) No Payments to Employees, Officers or Directors. Except as
set forth on Schedule 3.1(j) to the Company Disclosure Letter or as otherwise
specifically provided for in this Agreement, there is no employment or
severance contract, or other agreement requiring payments to be made or
increasing any amounts payable thereunder on a change of control or otherwise
as a result of the consummation of the Merger, with respect to any employee,
officer or director of the Company or any Company Sub.
(k) Properties. Except as provided in Schedule 3.1(k) to the
Company Disclosure Letter, the Company or one of the Company Subs owns fee
simple or leasehold, as applicable, title to each of the real properties
identified (as to fee simple property or leasehold property) in Schedule
3.1(k) to the Company Disclosure Letter (the "Company Properties"). The
Company Properties are not subject to liens, mortgages or deeds of trust,
claims against title, charges which are liens, security interests or other
encumbrances on title ("Encumbrances") and which could cause, individually or
in the aggregate, a Material Adverse Effect on the Company. The Company
Properties (other than the Company Properties under development) are not
subject to any rights of way, written agreements, laws, ordinances and
regulations affecting building use or occupancy, or reservations of an
interest in title (collectively, "Property Restrictions"), except for (i)
Encumbrances and Property Restrictions set forth in Schedule 3.1(k) to the
Company Disclosure Letter, (ii) Property Restrictions imposed or promulgated
by law or any governmental body or authority with respect to real property,
including zoning regulations, provided they do not materially adversely affect
the current use of any Company Property (other than the Company Properties
under development), (iii) Encumbrances and Property Restrictions disclosed on
existing title reports, existing title policies or existing surveys (in either
case copies of which title reports, title policies and surveys have been
delivered or made available to Acquiror; provided, however, that platting of
development land will not be shown on existing title reports or existing title
policies) and (iv) mechanics', carriers', workmen's, repairmen's liens and
other Encumbrances, Property Restrictions and other limitations of any kind,
if any, which, individually or in the aggregate, are not substantial in
amount, do not materially detract from the value of or materially interfere
with the current use of any of the Company Properties subject thereto or
affected thereby, and would not otherwise have a Material Adverse Effect on
the Company. Except as provided in Schedule 3.1(k) to the Company Disclosure
Letter, valid policies of title insurance have been issued insuring the
Company's or the applicable Company Sub's fee simple or leasehold, as
applicable, title to the Company Properties in amounts at least equal to the
purchase price (or in the case of leasehold properties, imputed value)
thereof, subject only to the matters disclosed above, and such policies are,
at the date hereof, in full force and effect and no material claim has been
made against any such policy. Except as provided in Schedule 3.1(k) to the
Company Disclosure Letter, (i) the Company has no Knowledge that any material
certificate, permit or license from any governmental authority having
jurisdiction over any of the Company Properties (other than the Company
Properties under development) or any agreement, easement or other right which
is necessary to permit the current use of the buildings and improvements on
any of the Company Properties (other than the Company Properties under
development) or which is necessary to permit the current use of all driveways,
roads, and other means of egress and ingress to and from any of the Company
Properties (other than the Company Properties under development) has not been
obtained and is not in full force and effect, or of any pending threat of
modification or cancellation of any of same, in each case which would
materially detract from the value of or materially interfere with the current
use of any of the Company Properties; (ii) the Company has not received written
notice of any material violation of any federal, state or municipal law,
ordinance, order, regulation or requirement affecting any portion of any of
the Company Properties issued by any governmental authority; (iii) the Company
has no Knowledge of any structural defects relating to the Company Properties
which would materially detract from the value of or materially interfere with
the current use of any of the Company Properties; (iv) the Company has no
Knowledge of any Company Properties whose building systems are not in working
order in any material respect; (v) the Company has no Knowledge of any physical
damage to any Company Property in excess of $50,000 for which there is no
insurance in effect covering the cost of the restoration; and (vi) the Company
has no Knowledge of any current renovation or restoration (not including
recurring capital expenditures) to any Company Property the remaining cost of
which exceeds $50,000. The Company has no Knowledge of any Property
Restrictions on any Company Property under development that are likely to
materially detract from the value of or materially interfere with the proposed
use of such Company Property (other than Property Restrictions which the
Company has no reason to believe it will be unable to have removed prior to
the proposed occupancy of the Company Property). The Company has no Knowledge
that any governmental authority having jurisdiction over any Company Property
under development has denied or rejected any application by the Company for a
certificate, permit or license with respect to such Company Property, which
denial or rejection is likely to materially detract from the value of or
materially interfere with the proposed use of such Company Property. The
Company has received no notice of any material violation of any zoning,
building or similar law, code, ordinance or regulation which applies to the
Company Properties under development. Neither the Company nor any of the
Company Subs has received any notice to the effect that (A) any condemnation
or adverse rezoning proceedings are pending or threatened with respect to any
of the Company Properties or (B) any zoning, building or similar law, code,
ordinance or regulation is or will be violated by the continued maintenance,
operation or use of any buildings or other improvements on any of the Company
Properties (other than the Company Properties under development) or by the
continued maintenance, operation or use of the parking areas except where such
proceedings or violations could not have, individually or in the aggregate, a
Material Adverse Effect on the Company. All material work to be performed,
material payments to be made and material actions to be taken by the Company
or the Company Subs prior to the date hereof pursuant to any agreement entered
into with a governmental body or authority in connection with a site approval,
zoning reclassification or other similar action relating to the Company
Properties has been performed, paid or taken, as the case may be, in all
material respects.
(l) Environmental Liability. Except as disclosed in any of the
SEC Reports or as set forth in Schedule 3.1(l) to the Company Disclosure
Letter, there are no legal, administrative, arbitral or other proceedings,
claims, actions, causes of action, private environmental investigations or
remediation activities or governmental investigations of any nature seeking to
impose, or that would result in the imposition, on the Company or the Company
Subs, of any liability or obligation arising under common law standards
relating to environmental protection, human health or safety, or under any
local, state or federal environmental statute, regulation or ordinance,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (collectively,
"Environmental Laws"), pending or, to the Knowledge of the Company,
threatened, against the Company or any of the Company Subs, which liability or
obligation would have a Material Adverse Effect on the Company. To the
Knowledge of the Company, except as disclosed in any of the SEC Reports or in
Schedule 3.1(l) to the Company Disclosure Letter, during or, with respect to
Company Properties not located within that certain area of Orange County,
California commonly known as the Irvine Ranch, prior to the period of (i) its
or any of the Company Sub's ownership or operation of any of their respective
current properties, (ii) its or any of the Company Sub's participation in the
management of any property, or (iii) its or any of the Company Sub's holding
of a security interest or other interest in any property, there were no
releases or threatened releases (which release would represent a violation of,
or is likely to lead to liability under, any Environmental Law) of hazardous,
toxic, radioactive or dangerous materials or other materials regulated under
Environmental Laws in, on, under or affecting any such property which would,
individually or in the aggregate, have a Material Adverse Effect on the
Company. Neither the Company nor any of the Company Subs is subject to any
written agreement, order, judgment, decree, letter or memorandum by or with
any Governmental Entity or third party imposing any material liability or
obligation pursuant to or under any Environmental Law that would have a
Material Adverse Effect on the Company.
(m) Contracts; Debt Instruments.
(i) To the Knowledge of the Company, neither the
Company nor any Company Sub is in violation of or in default under
(nor does there exist any condition which upon the passage of time or
the giving of notice or both would cause such a violation of or
default under) any material loan or credit agreement, note, bond,
mortgage, indenture, lease, permit, concession, franchise, license or
any other material contract, agreement, arrangement or understanding
(each, a "Material Contract") to which it is a party or by which it or
any of its properties or assets is bound, except as set forth in
Schedule 3.1(m)(i) to the Company Disclosure Letter. To the Knowledge
of the Company, a true, complete and correct copy of each Material
Contract that has not been filed as an exhibit to any of the SEC
Reports has been previously delivered or made available to Acquiror,
and a list of all Material Contracts that have not been filed as an
exhibit to any of the SEC Reports is set forth on Schedule 3.1(m)(i)
to the Company Disclosure Letter.
(ii) Except for any of the following disclosed in any
of the SEC Reports, Schedule 3.1(m)(ii) to the Company Disclosure
Letter sets forth (x) a list of all loan or credit agreements, notes,
bonds, mortgages, indentures and other agreements and instruments
pursuant to which any Indebtedness of the Company or any of the
Company Subs in an aggregate principal amount of in excess of $100,000
per item is outstanding or may be incurred and (y) the respective
principal amounts of all material Indebtedness of the Company or any
Company Sub (categorized to a level of specificity that the Acquiror
acknowledges is sufficient) outstanding on December 31, 1998. For
purposes of this Section 3.1(m)(ii), "Indebtedness" shall mean, with
respect to any Person, without duplication, (A) all indebtedness of
such Person for borrowed money, whether secured or unsecured, (B) all
obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person,
(C) all capitalized lease obligations of such Person, (D) all
obligations of such Person under interest rate or currency hedging
transactions (valued at the termination value thereof) and (E) all
guarantees of such Person of any such Indebtedness of any other
Person.
(n) Employee Benefit Plans; Labor Matters.
(i) With respect to each employee benefit plan, program,
arrangement and contract (including, without limitation, any "employee benefit
plan," as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), any Company Stock Option Plan and any bonus,
deferred compensation, stock bonus, stock purchase, restricted stock, stock
option, employment, termination, change in control and severance plan, program,
arrangement and contract), to which the Company or any Company Sub is a party,
which is maintained, administered or contributed to by the Company or any
Company Sub or Company Affiliate which the Company or any Company Sub or
Company Affiliate has maintained, administered or contributed to, or with
respect to which the Company or any Company Sub or Company Affiliate has or
could incur liability under the Code or ERISA (the "Company Benefit Plans"),
the Company has made available to Acquiror a true and complete copy of (A) such
Company Benefit Plan, (B) the most recent annual report (Form 5500) filed with
the Internal Revenue Service (the "IRS"), (C) each trust or other funding
arrangement relating to such Company Benefit Plan, (D) the most recent summary
plan description related to each Company Benefit Plan for which a summary plan
description is required, (E) the most recent actuarial report (if applicable)
relating to an Company Benefit Plan and (F) the most recent determination
letter, if any, issued by the IRS with respect to any Company Benefit Plan
qualified under Section 401(a) of the Code.
(ii) Each of the Company Benefit Plans that is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA and that is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the IRS, and the Company is not aware of
any circumstances likely to result in the revocation of any such favorable
determination letter that would have a Material Adverse Effect on the Company.
(iii) Each of the Company Benefit Plans has been administered
and operated in accordance with the terms thereof and has complied, in form
and in operation, with ERISA, the Code and any other applicable law, except to
the extent any failure to so comply, individually or in the aggregate, would
not have a Material Adverse Effect on the Company.
(iv) With respect to the Company Benefit Plans, no event has
occurred and, to the Knowledge of the Company, there exists no condition or
set of circumstances, in connection with which the Company or any Company Sub
could be subject to any liability under the terms of such Company Benefit
Plans, ERISA, the Code or any other applicable law which, individually or in
the aggregate, would have a Material Adverse Effect on the Company.
(v) Schedule 3.1(n)(v) to the Company Disclosure Letter sets
forth with respect to each Option (an "Option") to purchase shares of Company
Common Stock under any Company Stock Option Plan, whether or not then
exercisable or vested, that is outstanding on the date of this Agreement: (i)
the name of the holder of such Option, (ii) the number of shares of Company
Common Stock with respect to which such Option is then exercisable and vested,
(iii) the grant date of each Option and a listing of each Option which was
granted pursuant to a Stock Option Agreement (each, a "Stock Option
Agreement") which is not in the form of Stock Option Agreement previously
provided to Acquiror, and (iv) the per share exercise price of such Option.
(vi) Schedule 3.1(n)(v) to the Company Disclosure Letter sets
forth with respect to each Restricted Stock Unit Agreement (including any
dividend equivalents relating thereto) (a "Restricted Stock Unit Agreement")
under any Company Stock Option Plan, whether or not then vested, that is
outstanding on the date of this Agreement: (i) the name of the holder of such
Restricted Stock Unit Agreement, (ii) the number of Restricted Stock Units
subject to such Restricted Stock Unit Agreement, and (iii) the grant date of
each award of Restricted Stock Units and a listing of each award which was
granted pursuant to a Restricted Stock Unit Agreement which is not in the form
of Restricted Stock Unit Award Agreement previously provided to Acquiror.
(vii) Except for the Options and Restricted Stock Unit
Agreements (including any dividend equivalents relating thereto) disclosed in
Schedule 3.1(n)(v) or 3.1(n)(vi) to the Company Disclosure Letter, as of the
date of this Agreement, (i) there are no outstanding awards under any Company
Stock Option Plan, and (ii) there are no outstanding options, warrants or
other rights to acquire stock from the Company.
(viii) Schedule 3.1(j) to the Company Disclosure Letter sets
forth a list of each Retention Agreement.
(ix) There is no pending labor dispute, strike or work stoppage
against the Company or any Company Sub which may interfere with the respective
business activities of the Company or any Company Sub, except where such
dispute, strike or work stoppage would not have a Material Adverse Effect on
the Company. There is no pending charge or complaint against the Company or
any Company Sub by the National Labor Relations Board or any comparable state
agency, except where such unfair labor practice, charge or complaint would not
have a Material Adverse Effect on the Company.
(o) Absence of Certain Changes or Events. Except as disclosed
in any of the SEC Reports or in Schedule 3.1(o) to the Company Disclosure
Letter, since September 30, 1998 through the date of this Agreement, (A) each
of the Company and the Company Subs has conducted its business in the ordinary
course and has not incurred any material liability, except in the ordinary
course of their respective businesses; and (B) there has not been any change
in the business, financial condition or results of operations of the Company
or the Company Subs that has had, or will have, a Material Adverse Effect on
the Company.
(p) Vote Required. The affirmative vote of the holders of
two-thirds of the outstanding shares of Company Common Stock in favor of the
Merger is the only vote of the holders of any class or series of the Company's
stock required by the Organizational Documents of the Company or any Company
Sub or applicable law to approve, on behalf of the Company, this Agreement,
the Merger and the other transactions contemplated by this Agreement.
(q) Related Party Transactions. Set forth in Schedule 3.1(q)
to the Company Disclosure Letter is a list of all material arrangements,
agreements and contracts (other than arrangements, agreements and contracts to
which The Irvine Company, a Delaware corporation ("TIC"), or a wholly-owned
subsidiary of TIC is a party and other than any such arrangement, agreement or
contract filed as an exhibit to any SEC Report, substantially identical in
form to any such exhibit or substantially identical in form to the forms of
option agreement, restricted stock unit agreement and performance award
agreement previously provided to Acquiror) entered into by the Company or any
of the Company Subs, on the one hand, and any Person who is an officer,
director or affiliate of the Company or any of the Company Subs, any relative
of any of the foregoing or any entity of which any of the foregoing is an
affiliate, on the other hand. Copies of all such documents have previously
been delivered or made available to Acquiror.
(r) State Takeover Laws. The Board of Directors of the Company
has taken all such action required to be taken by it to provide that this
Agreement and the transactions contemplated hereby shall be exempt from the
requirements of any "moratorium," "control share," "fair price" or other
anti-takeover laws or regulations of any state. Title 3, Subtitles 6 and 7 of
the MGCL do not apply to the Merger or to any other business combination (as
defined in the MGCL) between the Company (or any affiliate thereof) and the
Acquiror (or any affiliate thereof) or to limit the voting rights of the
Acquiror as a holder of Company Common Stock.
(s) Brokers or Finders. Other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated, no agent, broker, investment banker, financial advisor or other
firm or Person is or will be entitled to any broker's or finder's fee or any
other similar commission or fee in connection with any of the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company or any Company Sub.
(t) Opinion of Financial Advisor. The Board of Directors of the
Company has received the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated dated
the date of this Agreement, to the effect that, as of such date, the Merger
Consideration is fair, from a financial point of view, to the holders of
Company Common Stock (other than Acquiror and its Affiliates).
3.2. Representations and Warranties of Acquiror. Acquiror
represents and warrants to the Company as follows:
(a) Organization, Standing and Power. Acquiror has been duly
organized and is validly existing and in good standing under the laws of the
State of Delaware. Acquiror is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure so to qualify would not, either individually or in
the aggregate, have a Material Adverse Effect on Acquiror. Acquiror was
organized on December 1, 1998. A true, correct and complete copy of the
Limited Liability Company Operating Agreement of Acquiror has previously been
delivered or made available to the Company. Since the date of its
organization, Acquiror has not engaged in any activities other than in
connection with arranging any financing required to consummate the
transactions contemplated hereby.
(b) Authority; No Conflicts.
(i) Acquiror has all requisite limited liability
company power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
corporate or limited liability company action on the part of Acquiror.
This Agreement has been duly executed and delivered by Acquiror and
constitutes a valid and binding agreement of Acquiror, enforceable
against Acquiror in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting creditors generally, or by general equity principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(ii) The execution and delivery of this Agreement does
not or will not, as the case may be, and the consummation of the
transactions contemplated hereby will not, result in any Violation of:
(A) any provision of the Organizational Documents of Acquiror or (B)
except as would not have a Material Adverse Effect on Acquiror and
subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in
paragraph (iii) below, any loan or credit agreement, note, mortgage,
bond, indenture, lease, benefit plan or other agreement, obligation,
instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
Acquiror or its properties or assets.
(iii) No consent, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Entity
is required by or with respect to Acquiror in connection with the
execution and delivery of this Agreement by Acquiror or the
consummation by Acquiror of the transactions contemplated hereby,
except for (A) the consents, approvals, orders, authorizations,
registrations, declarations and filings required under or in relation
to clauses (A), (B) or (C) of Section 3.1(d)(iii) and (B) such
consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or obtain would
not have a Material Adverse Effect on Acquiror or impair or delay the
ability of Acquiror to consummate the transactions contemplated
hereby.
(c) Available Funds. Acquiror has, and will maintain until the
Effective Time, cash or cash equivalents on hand in the amount of not less
than $150 million. Acquiror has or will have available, prior to the
Effective Time, sufficient funds to enable it to consummate the Merger and the
other transactions contemplated hereby and to pay all related fees and
expenses.
(d) Schedule 13E-3; Proxy Statement.
(i) None of the information supplied or to be supplied
by Acquiror or any of its Affiliates for inclusion or incorporation by
reference in the Schedule 13E-3 (except for (A) information about the
Company furnished by the Company to Acquiror and (B) information in
the Proxy Statement which is incorporated by reference in the Schedule
13E-3 (except for the information in the Proxy Statement about
Acquiror or any of its Affiliates furnished by Acquiror or any of its
Affiliates to the Company)) will, on the date the Schedule 13E-3 is
first mailed to the Company's stockholders or at the time of the
Company Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. If
at any time prior to the Effective Time any event (other than an event
with respect to the Company) should occur and is required to be
described in an amendment of, or a supplement to, the Schedule 13E-3,
such event shall be so described, and such amendment or supplement
shall be promptly filed by Acquiror with the SEC and, as required by
law, disseminated to the stockholders of the Company. If at any time
prior to the Effective Time any event with respect to the Company
should occur and is required to be described in an amendment of, or a
supplement to, the Schedule 13E-3, upon receipt of a description of
such event from the Company, such amendment or supplement shall be
promptly filed by Acquiror with the SEC and, as required by law,
disseminated to the stockholders of the Company. The Schedule 13E-3
will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this subsection 3.2(d)(i), any statement
which is made or incorporated by reference in the Schedule 13E-3 shall
be deemed modified or superseded to the extent any later filed
document incorporated by reference in the Schedule 13E-3 or any
statement included in the Schedule 13E-3 modifies or supersedes such
earlier statement.
(ii) None of the information about the Acquiror or any
of its Affiliates supplied or to be supplied by Acquiror or any of its
Affiliates for inclusion or incorporation by reference in the Proxy
Statement will, on the date it is first mailed to the Company's
stockholders or at the time of the Company Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. If at any time prior to the Effective
Time any event with respect to Acquiror or any of its Affiliates
should occur and is required to be described in an amendment of, or a
supplement to, the Proxy Statement, a description of such event shall
be promptly furnished by Acquiror or its Affiliate(s) to the Company.
For purposes of this subsection 3.2(d)(ii), any statement which is
made or incorporated by reference in the Proxy Statement shall be
deemed modified or superseded to the extent any later filed document
incorporated by reference in the Proxy Statement or any statement
included in the Proxy Statement modifies or supersedes such earlier
statement.
(e) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee from the
Company or a Company Sub as a result of Acquiror being a party hereto or
consummating any of the transactions contemplated by this Agreement.
ARTICLE IV.
CONDUCT OF BUSINESS PENDING THE MERGER
4.1. Covenants of the Company. During the period from the date
of this Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement or to the extent that Acquiror
shall otherwise consent in writing):
(a) Ordinary Course. The Company and the Company Subs shall
carry on their respective businesses in the usual, regular and ordinary course
in all material respects, in accordance with past practice, and shall use all
reasonable efforts to preserve intact their present business organizations and
preserve their relationships with customers, suppliers and others having
business dealings with them; provided, however, that no action by the Company
or the Company Subs with respect to matters specifically addressed by any
other provision of this Section 4.1 shall be deemed a breach of this Section
4.1(a) unless such action would constitute a breach of one or more of such
other provisions.
(b) Dividends; Changes in Share Capital. The Company shall
not, and shall not permit any Company Sub to, and shall not propose to: (i)
adjust, split, combine or reclassify any stock; (ii) make, declare or pay any
dividend or make any other distribution on, or directly or indirectly redeem,
purchase or otherwise acquire, any shares of its stock or any securities or
obligations convertible into or exchangeable for any shares of its stock,
voting securities or other ownership interests, or grant any stock
appreciation rights or grant any individual, corporation or other entity any
right, warrant or option to acquire any shares of its stock, voting securities
or other ownership interests, except for: (A) distributions on Trust Shares
not to exceed the greater of (1) the rate required by the terms thereof and
(2) the minimum rate required for the Trust to maintain its status as a REIT;
(B) regular quarterly distributions on preferred OP Units at the rates
required by the terms thereof; (C) regular quarterly distributions on common
OP Units at the rates recently paid by the OP; (D) regular quarterly
distributions on Company Common Stock not to exceed the greater of (1) $.385
per share and (2) the minimum rate required for the Company to maintain its
status as a REIT; provided that the record dates for the 1999 second and third
quarter distributions shall not be earlier than June 15, 1999 and September
15, 1999, respectively; and (E) payment of dividend equivalents with respect to
Restricted Stock Units; or (iii) repurchase, redeem or otherwise acquire any
shares of its stock or any stock, voting securities or ownership interests in
any Company Sub.
(c) Issuance of Equity Securities. Except as disclosed on
Schedule 4.1(c) to the Company Disclosure Letter, the Company shall not and
shall cause the Company Subs not to issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any equity securities of the
Company or any Company Sub, or enter into any agreement with respect to any of
the foregoing and shall not amend any equity-related awards issued pursuant to
the Company Benefit Plans, other than (i) the issuance of Company Common Stock
upon the exercise of Options outstanding as of the date of this Agreement as
disclosed in Section 3.1(c); provided any such issuance must be consistent
with past practice and in accordance with the terms of the Company Stock
Option Plans as in effect on the date of this Agreement, and no issuances
shall be made with respect to any Option which is amended, accelerated or
otherwise modified in violation of Section 4.1(i), (ii) issuances of Company
Common Stock to holders of common limited partner interests in the OP upon
exchange of common limited partner interests in the OP and (iii) issuances of
excess stock of the Company in accordance with the terms of, and subject to
the limits set forth in, the Organizational Documents of the Company upon
transfers of Company Common Stock.
(d) Organizational Documents. Except to the extent required to
comply with their respective obligations hereunder, required by law or
required by the rules and regulations of the NYSE, the Company and the Company
Subs shall not amend or propose to amend their respective Organizational
Documents.
(e) Properties. Except as set forth on Schedule 4.1(e) to the
Company Disclosure Letter, the Company shall not, and shall not permit any
Company Sub to sell, transfer, mortgage, lease, pledge, encumber or otherwise
dispose of any Company Properties or assets to any individual, corporation or
other entity other than a direct or indirect wholly owned Company Sub, or
cancel, release or assign any indebtedness to any such Person or any claims
held by any such Person, in each case that is material to such party, except
(i) pursuant to contracts or agreements in force at the date of this Agreement
in accordance with the terms of such contract or agreement as in effect on the
date of this Agreement, (ii) as reasonably necessary to protect REIT
qualification, (iii) pursuant to leases of apartment units in the ordinary
course of business or (iv) pursuant to sales, transfers, mortgages, leases,
pledges, encumbrances or other dispositions of assets other than Company
Properties in the ordinary course of business.
(f) Mergers and Acquisitions. Except as set forth on Schedule
4.1(f) to the Company Disclosure Letter, the Company shall not, and shall not
permit any Company Sub to merge or consolidate with any entity, make any
acquisition or investment either by purchase of stock or securities,
contributions to capital, property transfers, or purchases of any property or
assets of any other individual, corporation or other entity, except
transactions which are reasonably necessary to protect REIT qualifications.
(g) Contracts. Except as set forth on Schedule 4.1(g) to the
Company Disclosure Letter, the Company shall not, and shall not permit any
Company Sub to, except for transactions which are reasonably necessary to
protect REIT qualification, enter into or terminate any material contract or
agreement, or make any change in any of its material leases or contracts,
other than renewals of contracts and leases without materially adverse changes
of terms thereof.
(h) Indebtedness. Except as set forth on Schedule 4.1(h) to
the Company Disclosure Letter, the Company shall not, and shall not permit any
Company Sub to, (i) incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or rights
to acquire any debt securities of the Company or any Company Sub or guarantee
any debt securities of other Persons, (ii) make any loans, advances or capital
contributions to, or investments in, any other Person, or (iii) pay, discharge
or satisfy any claims, liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than in the case of clauses
(ii) and (iii), loans, advances, capital contributions, investments, payments,
discharges or satisfactions that are incurred or committed to in the ordinary
course of business consistent with past practice and that do not exceed
$250,000 individually or $1 million in the aggregate.
(i) Benefit Plans. The Company shall not, and shall not permit
any Company Sub to, (i) increase the compensation payable or to become payable
to any of its executive officers or employees or (ii) take any action with
respect to the grant of any severance or termination pay, or stay, bonus or
other incentive arrangement (other than pursuant to benefit plans and policies
(including the Retention Agreements) in effect on the date of this Agreement),
except any such increases or grants made in the ordinary course of business
and in accordance with past practice. The Company shall take all actions
necessary to assure that (i) no awards shall be granted under any Company
Stock Option Plan, or (ii) the terms and conditions of any award under any
Company Stock Option Plan will not be amended, accelerated, or otherwise
modified, and no other action will be taken with respect to any award under
any Company Stock Option Plan, except as provided in Section 2.3 or otherwise
in accordance with the contractual obligations of the Company in respect of
any such awards.
(j) Tax Election. The Company shall not, and shall not permit
any Company Sub to, make any material Tax election (unless required by law or
necessary to preserve the Company's status as a REIT or the status of any
Company Sub as a partnership for federal tax purposes, as a REIT or as a
"qualified REIT subsidiary" under Section 856(i) of the Code, as the case may
be).
(k) Accounting Principles and Taxes. The Company shall not,
and shall not permit any Company Sub to, (i) change in any material manner any
of its methods, principles or practices of accounting in effect at September
30, 1998, or (ii) make or rescind any express or deemed election relating to
Taxes, settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes, except in
the case of settlements or compromises relating to taxes on real property in
an amount not to exceed, individually or in the aggregate, $100,000, or change
any of its methods of reporting income or deductions for federal income tax
purposes from those employed in the preparation of its federal income tax
return for the most recently completed taxable year except, in the case of
clause (i), as may be required by the SEC, applicable law or GAAP.
(l) Liabilities. Except as set forth on Schedule 4.1(l) to the
Company Disclosure Letter, the Company shall not, and shall not permit any
Company Sub to, pay, discharge, settle or satisfy any claims, liabilities or
objections (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by,
the most recent consolidated financial statements (or the notes thereof) of
the Company included in any of the SEC Reports or incurred in the ordinary
course of business consistent with past practice.
(m) Other Actions. The Company shall not, and shall not permit
any Company Sub to, take any action that would result in (i) any of the
representations or warranties of the Company set forth in this Agreement that
are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in
any material respect or (iii) any of the conditions to the Merger set forth in
Article VI not being satisfied.
4.2. Advice of Changes; Government Filings. Each party shall
(a) confer on a regular and frequent basis with the other, (b) report (to the
extent permitted by law, regulation and any applicable confidentiality
agreement) on operational matters, consistent with past practice, and (c)
promptly advise the other orally and in writing of (i) any representation or
warranty made by it contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure by it (A) to comply with
or satisfy in any respect any covenant, condition or agreement required to be
complied with or satisfied by it under this Agreement that is qualified as to
materiality or (B) to comply with or satisfy in any material respect any
covenant, condition or agreement required to be complied with or satisfied by
it under this Agreement that is not so qualified as to materiality or (iii) any
change, event or circumstance that has had or would have a Material Adverse
Effect on the Company or materially adversely affect any party's ability to
consummate the Merger in a timely manner; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement. The Company, the Company Subs and Acquiror shall file
all reports required to be filed by each of them with the SEC (and all other
Governmental Entities) between the date of this Agreement and the Effective
Time and shall (to the extent permitted by law or regulation or any applicable
confidentiality agreement) deliver to the other party copies of all such
reports promptly after the same are filed, consistent with past practice.
Subject to applicable laws relating to the exchange of information, each of
the Company and Acquiror shall have the right to review in advance, and to the
extent practicable each will consult with the other, with respect to all the
information relating to the other party and each of their respective
Subsidiaries, which appears in any filings, announcements or publications made
with, or written materials submitted to, any third party or any Governmental
Entity in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of the parties hereto agrees to act
reasonably and as promptly as practicable. Each party agrees that, to the
extent practicable, it will keep the other party apprised of the status of
matters relating to completion of the transactions contemplated hereby.
ARTICLE V.
ADDITIONAL AGREEMENTS
5.1. Preparation of Schedule 13E-3 and Proxy Statement; the
Company Stockholders Meeting.
(a) Acquiror will, as promptly as practicable, prepare and file
with the SEC, and will cause its Affiliates to cooperate, to the extent
necessary, in such preparation and filing, a Rule 13e-3 Transaction Statement
on Schedule 13E-3 (the "Schedule 13E-3"). Acquiror will use all reasonable
efforts, and will cause its Affiliates to cooperate, to the extent necessary,
to cause the Schedule 13E-3 to be mailed to stockholders of the Company at the
earliest practicable date.
(b) The Company will, as promptly as practicable, prepare and
file with the SEC a proxy statement in connection with the vote of the
Company's stockholders with respect to the Merger and this Agreement (such
proxy statement, together with any amendments thereof or supplements thereto,
in each case in the form or forms mailed to the Company's stockholders, are
herein called the "Proxy Statement"). The Company will use all reasonable
efforts to cause the Proxy Statement to be mailed to stockholders of the
Company at the earliest practicable date.
(c) The Company shall (i) as soon as practicable following the
date of this Agreement, duly call, give notice of, convene and hold a meeting
of its stockholders (the "Company Stockholders Meeting") for the purpose of
obtaining the Required Company Votes, and (ii) through its Board of Directors
and the Special Committee, recommend to its stockholders that they approve the
transactions contemplated by this Agreement and shall not withdraw, modify or
change such recommendation, or recommend any other offer or proposal, at any
time prior to the conclusion of the Company Stockholders Meeting.
Notwithstanding clause (ii) of the immediately preceding sentence of this
subsection 5.1(c), the Special Committee or the Board of Directors of the
Company (with the concurrence of the Special Committee) may at any time prior
to the Effective Time withdraw, modify or change any recommendation regarding
this Agreement or the Merger, or recommend any other offer or proposal, if the
Special Committee or the Board of Directors of the Company (with the
concurrence of the Special Committee) after consultation with its counsel,
determines that taking any such action is required in accordance with its
legal duties to the Company's stockholders under applicable law; provided,
such withdrawal, modification, change or recommendation shall not affect or
excuse the performance, or cure any breach, of, any obligation of the Company
hereunder (other than that set forth in clause (ii) of the immediately
preceding sentence of this subsection 5.1(c)), including, but not limited to,
the requirements in clause (i) of the immediately preceding sentence of this
subsection 5.1(c) and the requirements in Section 5.5.
5.2. Access to Information. Upon reasonable notice, the Company
shall (and shall cause the Company Subs, to the extent permitted by the
Organizational Documents or other pertinent agreements of such entity, to)
afford to the officers, employees, accountants, counsel, financial advisors
and other representatives of Acquiror reasonable access during normal business
hours, during the period prior to the Effective Time, to all its properties,
books, contracts, commitments and records and, during such period, the Company
shall (and shall cause the Company Subs, to the extent permitted by the
Organizational Documents or other pertinent agreements of such entity, to)
furnish promptly to Acquiror (a) a copy of each report, schedule, registration
statement and other document filed, published, announced or received by it
during such period pursuant to the requirements of Federal or state securities
laws, as applicable (other than reports or documents which such party is not
permitted to disclose under applicable law) and (b) consistent with its legal
obligations, all other information concerning its business, properties and
personnel as Acquiror may reasonably request.
5.3. Approvals and Consents; Cooperation. Each of the Company
and Acquiror shall cooperate with each other and use (and shall take all
reasonable steps to cause each of their respective Subsidiaries to use) its
reasonable efforts to take or cause to be taken all actions, and do or cause
to be done all things, necessary, proper or advisable on their part under this
Agreement and applicable laws to consummate and make effective the Merger and
the other transactions contemplated by this Agreement as soon as practicable,
including (i) preparing and filing as promptly as practicable all
documentation to effect all necessary applications, notices, petitions,
filings, and other documents and to obtain as promptly as practicable all
consents, waivers, licenses, orders, registrations, approvals, permits, tax
rulings and authorizations necessary or advisable to be obtained from any
third party and/or any Governmental Entity in order to consummate the Merger
or any of the other transactions contemplated by this Agreement and (ii)
taking all reasonable steps as may be necessary to obtain all such consents,
waivers, licenses, registrations, permits, authorizations, tax rulings, orders
and approvals. Without limiting the generality of the foregoing, each of the
Company and Acquiror agrees to make all necessary filings in connection with
the Required Regulatory Approvals as promptly as practicable after the date of
this Agreement, and to use its reasonable efforts to furnish or cause to be
furnished, as promptly as practicable, all information and documents requested
with respect to such Required Regulatory Approvals and shall otherwise
cooperate with the applicable Governmental Entity in order to obtain any
Required Regulatory Approvals in as expeditious a manner as possible. Each of
the Company and Acquiror shall use its reasonable efforts to resolve such
objections, if any, as any Governmental Entity may assert with respect to this
Agreement and the transactions contemplated hereby in connection with the
Required Regulatory Approvals. In the event that a suit is instituted by a
Person or Governmental Entity challenging this Agreement and the transactions
contemplated hereby as violative of applicable antitrust or competition laws,
each of the Company and Acquiror shall use its reasonable efforts to resist or
resolve such suit. With respect to any action, suit, or proceeding pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or charge
would (i) prevent consummation of any of the transactions contemplated by this
Agreement, (ii) cause any of the transactions contemplated by this Agreement
to be rescinded following consummation, (iii) affect adversely the right of
any of Acquiror or its Affiliates to own its assets and to operate its
businesses or (iv) cause the Company, the Company Sub, Acquiror or any of
their Affiliates to pay damages in connection with claims related to the
transactions contemplated by this Agreement, the Company and Acquiror (x)
shall confer and cooperate with one another in the defense thereof and (y)
shall not, without the written consent of the other (not to be unreasonably
withheld), enter into any settlement, or consent to the entry of any judgment,
relating thereto; provided that neither party may withhold its consent to any
settlement or judgment which would not have the effects described in clauses
(i)-(iv) of this sentence and pursuant to which it would be fully and
unconditionally released from liability. The Company and Acquiror each shall,
upon request by the other, furnish the other with all information concerning
itself, its Subsidiaries, directors, officers and stockholders and such other
matters as may reasonably be necessary or advisable in connection with the
Schedule 13E-3 or the Proxy Statement or any other statement, filing, tax
ruling request, notice or application made by or on behalf of the Company,
Acquiror or any of their respective Subsidiaries to any third party and/or any
Governmental Entity in connection with the Merger or the other transactions
contemplated by this Agreement.
5.4. Stock Options and Restricted Stock. The Company and each
Company Sub shall take all actions as may be necessary under the Company Stock
Option Plans to effect the cancellations described in Section 2.3 and shall
comply with all requirements regarding tax withholding in connection
therewith. In addition to the foregoing and subject to the terms of the
Company Stock Option Plans and applicable law, the Company shall take all
actions necessary to cause the Company Stock Option Plans to be terminated at
or prior to the Effective Time, and to satisfy Acquiror that no holder of
Options, Restricted Stock Units or other awards under such Plans, or
participant in any Company Stock Option Plans, will have any right to acquire
any interest in the Company or Acquiror as a result of the exercise of Options,
Restricted Stock Units or other awards or rights pursuant to such Company
Stock Option Plans at or after the Effective Time.
5.5. Acquisition Proposals.
(a) Unless and until this Agreement shall have been terminated
by either party pursuant to Article VII hereof, the Company shall not take or
cause, directly or indirectly, any of the following actions with any party
other than Acquiror or its designees: (i) solicit, knowingly encourage,
initiate or participate in any negotiations, inquiries or discussions with
respect to any offer or proposal to acquire all or any part of its business,
assets or capital shares whether by merger, consolidation, other business
combination, purchase of assets, tender or exchange offer or otherwise (each
of the foregoing, an "Acquisition Proposal"); (ii) disclose, in connection
with an Acquisition Proposal, any information or provide access to its
properties, books or records, except as required by law or pursuant to a
governmental request for information; (iii) enter into or execute any
agreement relating to an Acquisition Proposal; or (iv) make or authorize any
public statement, recommendation or solicitation in support of any Acquisition
Proposal other than with respect to the Merger.
(b) Notwithstanding the foregoing, in response to a bona fide,
unsolicited, written Acquisition Proposal from a Third Party (that does not
result from a breach of this Section 5.5), the Special Committee may, and may
authorize and permit the Company's officers, directors, employees, financial
advisors, representatives, or agents to, provide such Third Party with
nonpublic information, otherwise facilitate any effort or attempt by such
Third Party to make or implement such Acquisition Proposal, agree to or
recommend or endorse any such Acquisition Proposal with or by any Third Party,
and participate in discussions and negotiations with such Third Party relating
to such Acquisition Proposal, if (i) the Special Committee believes in good
faith (after consultation with its financial advisor) that such Acquisition
Proposal (A) provides or is likely to provide for higher per share value to
the stockholders of the Company, (B) is capable of being fully financed and
performed and (C) is not subject or is not likely to be subject to any
material conditions to which the Merger is not subject (a "Superior
Proposal"), (ii) the Special Committee, after having consulted with and
considered the advice of outside counsel, has reasonably determined in good
faith that the failure to do so would cause the members of such Special
Committee to breach their legal duties to the stockholders of the Company under
applicable law and (iii) the Third Party has entered into a confidentiality
agreement pertaining to nonpublic information regarding the Company containing
customary terms and conditions. The Company agrees, if so requested by
Acquiror in its sole and absolute discretion (such request must to be made
within five business days after receipt by Acquiror of notice of the Superior
Proposal from the Company in accordance with Section 5.5(c)), to enter into an
agreement to consummate a transaction with Acquiror or its designee on terms
providing equivalent value for the Company's stockholders to the value
provided by the terms contained in the Superior Proposal, including without
limitation on the same terms contained in the Superior Proposal (a "Matching
Transaction"). If Acquiror does not timely request to consummate a Matching
Transaction following the Company's receipt of a Superior Proposal, the
Special Committee (on behalf of the Company) may terminate this Agreement
under Section 7.1(f) and accept such Superior Proposal, and the Special
Committee may make or authorize any public statement, recommendation or
solicitation in support of such Superior Proposal.
(c) The Company shall notify Acquiror reasonably promptly after
receipt by the Company (or any of their advisors) of any Acquisition Proposal
or any request for nonpublic information in connection with an Acquisition
Proposal or for access to the Company's properties, books or records by any
person or entity that informs the Company that it is considering making, or
has made, an Acquisition Proposal. Such notice shall be made orally and in
writing and shall indicate in reasonable detail the identity of the offeror
and the terms and conditions of such proposal, inquiry or contact. If the
Acquisition Proposal is believed by the Special Committee to be a Superior
Proposal, the Company shall reasonably promptly furnish to Acquiror all of the
terms of such proposal and copies of any proposed agreement relating thereto.
The Company shall continue to keep Acquiror informed, on a reasonably prompt
basis, of the status of any discussions or negotiations of any Acquisition
Proposal and the terms being discussed or negotiated.
(d) The provisions of this Section 5.5 shall not constitute a
waiver or limitation or in any way affect the rights of Acquiror or its
Affiliates under the Organizational Documents of the Company or otherwise.
(e) The provisions of this Section 5.5 shall not be deemed to
affect any rights or claims in tort or otherwise of Acquiror or its Affiliates
against any Person not affiliated with a party to this Agreement with respect
to any attempt to interfere with, cause the termination of, or cause Acquiror
or its Affiliates to lose any benefits under, this Agreement.
5.6. [Intentionally Omitted].
5.7. Withholding/Foreign Persons. The Company shall promptly
take all steps necessary to ensure compliance, and shall comply, with all
withholding obligations with respect to any foreign stockholders of the
Company in connection with the payment of the Merger Consideration.
5.8. Public Announcements. The Company and Acquiror shall use
all reasonable efforts to develop a joint communications plan and each party
shall use all reasonable efforts (i) to ensure that all press releases and
other public statements with respect to the transactions contemplated hereby
shall be consistent with such joint communications plan, and (ii) unless
otherwise required by applicable law or by obligations pursuant to any listing
agreement with or rules of any securities exchange, to consult with each other
before issuing any press release or otherwise making any public statement with
respect to this Agreement or the transactions contemplated hereby.
5.9. Director and Officer Liability. For six years after the
Effective Time, Acquiror will cause the Surviving Entity to indemnify and hold
harmless the present and former officers and directors of the Company in
respect of acts or omissions occurring prior to the Effective Time to the
extent provided under the Company's Organizational Documents in effect on the
date hereof; provided that such indemnification shall be subject to any
limitation imposed from time to time by applicable law. For six years after
the Effective Time, Acquiror will cause the Surviving Entity to provide
officers' and directors' liability insurance in respect of acts or omissions
occurring prior to the Effective Time covering each such person currently
covered by the Company's officers' and directors' liability insurance policy
on terms with respect to coverage and amount no less favorable than those of
such policy in effect on the date hereof.
5.10. Payment of Dividends. Prior to the Effective Time, the
Company shall pay any and all dividends or make any other distributions with
respect to the Company Common Stock which have been declared or made by the
Company as permitted by this Agreement. The record date and amount of any
dividends or any other distributions with respect to the Company Common Stock
which have been declared or made by the Company prior to the date of this
Agreement and which remain unpaid as of the date of this Agreement are set
forth on Schedule 5.10 to the Company Disclosure Letter.
5.11. Further Assurances. In case at any time after the
Effective Time any further action is reasonably necessary to carry out the
purposes of this Agreement, the proper officers of the Company and Acquiror
shall take any such reasonably necessary action.
ARTICLE VI.
CONDITIONS PRECEDENT
6.1. Conditions to Each Party's Obligation to Effect the
Merger. The obligations of the Company and Acquiror to effect the Merger are
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions (it being understood that, in the case of the Company,
any determination as to the satisfaction or waiver of any of the following
conditions shall be made only by the Special Committee on behalf of the
Company):
(a) Required Company Votes. The Company shall have obtained the
Required Company Votes.
(b) No Injunctions or Restraints, Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued
by a court or other Governmental Entity of competent jurisdiction shall be in
effect and have the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger; provided, however, that the provisions
of this Section 6.1(b) shall not be available to any party whose failure to
fulfill its obligations pursuant to Section 5.3 shall have been the cause of,
or shall have resulted in, such order or injunction.
(c) HSR Act. If applicable, the waiting period (and any
extension thereof) applicable to the Merger under the HSR Act shall have been
terminated or shall have expired.
6.2. Additional Conditions to Obligations of Acquiror. The
obligations of Acquiror to effect the Merger are subject to the satisfaction
of, or waiver by Acquiror, on or prior to the Closing Date, of the following
additional conditions:
(a) Representations and Warranties. Each of the
representations and warranties of the Company set forth in this Agreement that
is qualified as to materiality shall have been true and correct when made and
shall be true and correct on and as of the Closing Date as if made on and as
of such date (other than representations and warranties which address matters
only as of a certain date which shall be true and correct as of such certain
date), and each of the representations and warranties of the Company that is
not so qualified shall have been true and correct in all material respects
when made and shall be true and correct in all material respects on and as of
the Closing Date as if made on and as of such date (other than representations
and warranties which address matters only as of a certain date which shall be
true and correct in all material respects as of such certain date).
(b) Performance of Obligations of the Company. The Company
shall have performed or complied with all agreements and covenants required to
be performed by it under this Agreement at or prior to the Closing Date that
are qualified as to materiality and shall have performed or complied in all
material respects with all other agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that are
not so qualified as to materiality.
(c) REIT Tax Opinion. Acquiror shall have received an opinion
of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to the Company, in form and substance
reasonably satisfactory to Acquiror, dated as of the Effective Time,
substantially to the effect that (i) commencing with the taxable year ended
December 31, 1993, the Company has been organized and has operated in
conformity with the requirements for qualification as a REIT within the
meaning of the Code, (ii) commencing with its taxable year ended December 31,
1998, the Trust has been organized and has operated in conformity with the
requirements for qualification as a REIT within the meaning of the Code and
(iii) the OP and each other Company Sub which is a partnership has been, at
all times since it has been a Company Sub, and continues to be, treated for
federal income tax purposes as a partnership and not as an association or
publicly traded partnership taxable as a corporation (in each case with
customary exceptions, conditions, assumptions and qualifications).
(d) Cancellation of Options and Restricted Stock Units. All
Options and Restricted Stock Units under any Company Stock Option Plan shall
be canceled in accordance with Section 2.3, and no holder of Options,
Restricted Stock Units (or dividend equivalents relating thereto) or other
awards under any Company Stock Option Plan or any other incentive compensation
plans of the Company or any Company Sub shall have any further rights
thereunder or any right or interest in the Company or Acquiror on or after the
Effective Time, except as provided in the Retention Agreements. There shall be
(i) no outstanding awards under any Company Stock Option Plan and (ii) no
outstanding options, warrants or other rights to acquire stock or other forms
of equity from the Company.
6.3. Additional Conditions to Obligations of the Company. The
obligations of the Company to effect the Merger are subject to the
satisfaction of, or waiver by the Company on or prior to the Closing Date of
the following additional conditions (it being understood that any
determination as to the satisfaction or waiver of any of the following
conditions shall be made only by the Special Committee on behalf of the
Company):
(a) Representations and Warranties. Each of the
representations and warranties of Acquiror set forth in this Agreement that is
qualified as to materiality shall have been true and correct when made and
shall be true and correct on and as of the Closing Date as if made on and as
of such date (other than representations and warranties which address matters
only as of a certain date which shall be true and correct as of such certain
date), and each of the representations and warranties of Acquiror that is not
so qualified shall have been true and correct in all material respects when
made and shall be true and correct in all material respects on and as of the
Closing Date as if made on and as of such date (other than representations and
warranties which address matters only as of a certain date which shall be true
and correct in all material respects as of such certain date).
(b) Performance of Obligations of Acquiror. Acquiror shall have
performed or complied with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that are
qualified as to materiality and shall have performed or complied in all
material respects with all agreements and covenants required to be performed
by it under this Agreement at or prior to the Closing Date that are not so
qualified as to materiality.
ARTICLE VII.
TERMINATION AND AMENDMENT
7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, by action taken or authorized by the Special
Committee (on behalf of the Company) or the Managing Member (on behalf of the
Acquiror), whether before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company:
(a) By mutual written consent of Acquiror and the Special
Committee (on behalf of the Company), by action of the Managing Member of the
Acquiror and the Special Committee (on behalf of the Company);
(b) By either the Special Committee (on behalf of the Company)
or Acquiror if the Merger shall not have been consummated by the date which is
eight months from the date of this Agreement (the "Outside Date"); provided
that the right to terminate this Agreement under this Section 7.1(b) shall not
be available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Merger to
occur on or before such date;
(c) By either the Special Committee (on behalf of the Company)
or Acquiror if any Governmental Entity shall have issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other action
the parties shall have used their reasonable efforts to resist, resolve or
lift, as applicable, subject to the provisions of Section 5.3) permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement, and such order, decree, ruling or other action shall have
become final and nonappealable;
(d) By either Acquiror or the Special Committee (on behalf of
the Company) if the Required Company Votes shall not have been obtained at a
duly held meeting of stockholders or at any adjournment thereof; provided that
the right to terminate this Agreement under this Section 7.1(d) shall not be
available to the Company if it fails to fulfill its obligations under Section
5.1 and Section 5.5;
(e) By Acquiror, if (i) after the receipt by the Company of an
Acquisition Proposal, the Special Committee or the Board of Directors of the
Company (including a majority of the members of the Special Committee) shall
have withdrawn or modified its recommendation of this Agreement or the Merger,
(ii) after the receipt by the Company of an Acquisition Proposal (which
Acquisition Proposal is public), Acquiror requests in writing that the Special
Committee or the Board of Directors of the Company publicly reconfirm its
recommendation of this Agreement and the Merger to the stockholders of the
Company and the Special Committee or the Board of Directors of the Company
(including a majority of the members of the Special Committee), as applicable,
fails to do so within 5 business days after its receipt of Acquiror's request;
(iii) the Special Committee or the Board of Directors of the Company
(including a majority of the members of the Special Committee) shall have
recommended to the stockholders of the Company an Alternative Transaction;
(iv) a tender offer or exchange offer for 20% or more of the outstanding
shares of Company Common Stock is commenced (other than by the Company or an
Affiliate of the Company) and the Special Committee or the Board of Directors
of the Company (including a majority of the members of the Special Committee)
recommends that the stockholders of the Company tender their shares in such
tender or exchange offer; or (v) the Company fails to call and hold the
Company Stockholders Meeting by the Outside Date in breach of Section 5.1(c).
(f) By the Special Committee (on behalf of the Company), prior
to the approval of this Agreement by the stockholders of the Company, if the
Company and the Special Committee have complied in all respects with Section
5.5, and the Special Committee has determined to accept a Superior Proposal;
provided, however, that no termination shall be effective pursuant to this
Section 7.1(f) under circumstances in which a Break-Up Fee is payable by the
Company pursuant to Section 7.2(c)(iii), unless concurrently with such
termination, such Break-Up Fee is paid in full by the Company in accordance
with Section 7.2(c)(iii), as applicable;
(g) By Acquiror, upon a material breach of any covenant or
agreement on the part of the Company set forth in this Agreement, or if (i)
any representation or warranty of the Company that is qualified as to
materiality shall have become untrue or (ii) any representation or warranty of
the Company that is not so qualified shall have become untrue in any material
respect, in each case such that the conditions set forth in Section 6.2(a) or
Section 6.2(b) would not be satisfied (a "Terminating Company Breach");
provided, however, that, if such Terminating Company Breach is capable of
being cured by the Company prior to the Effective Time, for so long as the
Company continues in good faith to attempt to cure such breach, Acquiror may
not terminate this Agreement under this Section 7.1(g); or
(h) By the Special Committee (on behalf of the Company), upon a
material breach of any covenant or agreement on the part of Acquiror set forth
in this Agreement, or if (i) any representation or warranty of Acquiror that
is qualified as to materiality shall have become untrue or (ii) any
representation or warranty of Acquiror that is not so qualified shall have
become untrue in any material respect, in each case such that the conditions
set forth in Section 6.3(a) or Section 6.3(b) would not be satisfied
("Terminating Acquiror Breach"); provided, however, that, if such Terminating
Acquiror Breach is capable of being cured by Acquiror prior to the Effective
Time, for so long as Acquiror continues in good faith to attempt to cure such
breach, the Company may not terminate this Agreement under this Section 7.1(h).
7.2. Expenses
(a) Except as otherwise provided in this Section 7.2, all
Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such Expenses. As
used in this Agreement, "Expenses" includes all reasonable out-of-pocket
expenses (including, without limitation, all reasonable fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby,
including the preparation, printing, filing and mailing of the Schedule 13E-3
and Proxy Statement and the solicitation of stockholder approvals and all
other matters related to the transactions contemplated hereby.
(b) Notwithstanding the foregoing, if (i) the Special Committee
or the Board of Directors of the Company (including a majority of the members
of the Special Committee) withdraw, modify or change any recommendation
regarding this Agreement or the Merger, or recommend any other offer or
proposal, as contemplated in Section 5.1(c) and (ii) the condition set forth
in Section 6.1(a) is not satisfied, then the Company shall pay all of the
Expenses incurred by Acquiror.
(c) The Company shall pay Acquiror a Break-Up Fee upon the
earliest to occur of the following events:
(i) the termination of this Agreement by either
Acquiror or the Company pursuant to Section 7.1(d), if a proposal for
an Alternative Transaction involving the Company shall have been
publicly announced prior to the Company Stockholders' Meeting and
either a definitive agreement for an Alternative Transaction is
entered into, or such Alternative Transaction (or another Alternative
Transaction with the proponent of such transaction or an Affiliate) is
consummated, within eighteen months of such termination;
(ii) the termination of this Agreement by Acquiror
pursuant to Section 7.1(e); or
(iii) the termination of this Agreement by the Special
Committee (on behalf of the Company) pursuant to Section 7.1(f).
The Company's payment of a Break-Up Fee pursuant to this subsection shall be
the sole and exclusive remedy of Acquiror against the Company and any of its
Subsidiaries and their respective directors, officers, employees, agents,
advisors or other representatives with respect to the occurrences giving rise
to such payment; provided that this limitation shall not apply in the event of
a willful breach of this Agreement by the Company.
(d) The Break-Up Fee payable pursuant to Section 7.2(c) shall
be paid concurrently with the first to occur of the events described in
Section 7.2(c)(i), (ii) or (iii).
(e) As used in this Agreement, "Alternative Transaction" means
either (i) a transaction pursuant to which any Third Party acquires more than
20% of the outstanding shares of Company Common Stock pursuant to a tender
offer or exchange offer or otherwise, (ii) a merger or other business
combination involving the Company pursuant to which any Third Party (or the
stockholders of a Third Party) acquires more than 20% of the outstanding
shares of Company Common Stock or the entity surviving such merger or business
combination, or (iii) any other transaction pursuant to which any Third Party
acquires control of assets (including for this purpose the outstanding equity
securities of Subsidiaries of the Company and the entity surviving any merger
or business combination including any of them) of the Company having a fair
market value (as determined by the Special Committee of the Company in good
faith) equal to more than 20% of the fair market value of all the assets of
the Company and its Subsidiaries, taken as a whole, immediately prior to such
transaction.
(f) The "Break-Up Fee" shall be an amount equal to $19,250,000.
7.3. Effect of Termination. In the event of termination of this
Agreement by either the Company or Acquiror as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Acquiror or the Company or their respective
officers, members or directors except (i) with respect to Section 5.6 and (ii)
with respect to any liabilities or damages incurred or suffered by a party as
a result of the breach by the other party of any of its representations,
warranties, covenants or other agreements set forth in this Agreement.
7.4. Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorization of the Special Committee (on behalf
of the Company) and the Managing Member of Acquiror, at any time before or
after approval of the matters presented in connection with the Merger by the
stockholders of the Company, but, after any such approval, no amendment shall
be made which by law or in accordance with the rules of the NYSE requires
further approval by such stockholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
7.5. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorization of the Special
Committee (on behalf of the Company) and the Managing Member of Acquiror, may,
to the extent legally allowed, (i) extend the time for the performance of any
of the obligations or other acts of the other party hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth
in a written instrument signed on behalf of such party. No delay on the part
of any party hereto in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any
party hereto of any right, power or privilege hereunder operate as a waiver of
any other right, power or privilege hereunder, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege hereunder. Unless otherwise provided, the rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
which the parties hereto may otherwise have at law or in equity. The failure of
any party to this Agreement to assert any of its rights under this Agreement
or otherwise shall not constitute a waiver of those rights.
ARTICLE VIII.
GENERAL PROVISIONS
8.1. Non-Survival of Representations, Warranties and
Agreements; No Other Representations and Warranties. None of the
representations, warranties, covenants and other agreements in this Agreement
or in any instrument delivered pursuant to this Agreement, including any
rights arising out of any breach of such representations, warranties,
covenants and other agreements, shall survive the Effective Time, except for
those covenants and agreements contained herein and therein that by their
terms apply or are to be performed in whole or in part after the Effective
Time. Each party hereto agrees that, except for the representations and
warranties contained in this Agreement, neither of the Company nor Acquiror
makes any other representations or warranties, and each hereby disclaims any
other representations and warranties made by itself or any of its officers,
directors, members, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this Agreement,
the documents and the instruments referred to herein, or the transactions
contemplated hereby or thereby, notwithstanding the delivery or disclosure to
the other party or the other party's representatives of any documentation or
other information with respect to any one or more of the foregoing.
8.2. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (a) on the date of delivery
if delivered personally, (b) on the first Business Day following the date of
dispatch if delivered by a nationally recognized next-day courier service, (c)
on the fifth Business Day following the date of mailing if delivered by
registered or certified mail, return receipt requested, postage prepaid or (d)
if sent by facsimile transmission, with a copy mailed on the same day in the
manner provided in (a) or (b) above, when transmitted and receipt is
acknowledged. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the
party to receive such notice:
(a) if to Acquiror, to TIC Acquisition LLC, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇, with copies to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇;
(b) if to the Company, to Irvine Apartment Communities, Inc.,
Attention: President, Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Facsimile No. (212) 450-
4800.
8.3. Interpretation. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents, glossary of defined terms and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation." The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden or proof
shall arise favoring or disfavoring any party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the content requires otherwise. It
is understood and agreed that neither the specifications of any dollar amount
in this Agreement nor the inclusion of any specific item in the Schedules or
Exhibits is intended to imply that such amounts or higher or lower amounts, or
the items so included or other items, are or are not material, and neither
party shall use the fact of setting of such amounts or the fact of the
inclusion of such item in the Schedules or Exhibits in any dispute or
controversy between the parties as to whether any obligation, item or matter
is or is not material for purposes hereof.
8.4. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
both parties need not sign the same counterpart.
8.5. Entire Agreement; No Third Party Beneficiaries.
(a) This Agreement (including the Schedules and Exhibits)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.
(b) This Agreement shall be binding upon and inure solely to
the benefit of each party hereto, and nothing in this Agreement, express or
implied, except for Sections 2.1, 2.3 and 5.9, is intended to or shall confer
upon any other Person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
8.6. Governing Law. Except to the extent that the MGCL shall
govern the Merger, this Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to the laws
that might be applicable under conflicts of laws principles.
8.7. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible. Any
provision of this Agreement held invalid or unenforceable only in part, degree
or certain jurisdictions will remain in full force and effect to the extent
not held invalid or unenforceable. To the extent permitted by applicable law,
each party waives any provision of law which renders any provision of this
Agreement invalid, illegal or unenforceable in any respect.
8.8. Assignment. This Agreement and the rights, interests and
obligations hereunder shall not be assigned, except by Acquiror to a party
which, in a written instrument shall agree to assume all of Acquiror's
obligations hereunder and be bound by all of the terms and conditions of this
Agreement; provided, however, that no such assignment shall relieve the
Acquiror of its obligations hereunder. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
8.9. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed
that the parties shall be entitled to specific performance of the terms
hereof, this being in addition to any other remedy to which they are entitled
at law or in equity.
8.10. Definitions. As used in this Agreement:
(a) "Affiliate" means an affiliate, as defined in Rule 405
promulgated under the Securities Act; provided, that the Company and the
Company Subs shall not be deemed Affiliates of Acquiror or its members or
their Affiliates for purposes of this Agreement. For the avoidance of doubt,
for purposes of this Agreement, TIC shall be an Affiliate of Acquiror.
(b) "Board of Directors" means the Board of Directors of any
specified Person and any properly serving and acting committees thereof.
(c) "Business Day" means any day on which banks are not
required or authorized to close in the City of New York.
(d) "Company Affiliate" shall mean any entity which is (or at
any relevant time was) treated as a single employer with the Company or any
Company Sub under Section 414 of the Code or Section 4001(b)(11) of ERISA.
(e) "Company Disclosure Letter" means the letter previously
delivered to Acquiror by the Company disclosing certain information in
connection with this Agreement.
(f) "Company Stock Option Plans" means the Company's 1993 Stock
Option Plan for Directors, 1993 Long-Term Stock Incentive Plan and 1996
Long-Term Stock Incentive Plan, each as amended.
(g) "Company Sub" means a Subsidiary of the Company (excluding
any Subsidiary of the Company which is inactive, has no business operations
and has no liabilities).
(h) "Knowledge" means the actual knowledge after reasonable
investigation of the executive officers of the applicable entity.
(i) "Material Adverse Effect" means, with respect to any
Person, any adverse change, circumstance or effect that, individually or in
the aggregate with all other adverse changes, circumstances and effects, would
be materially adverse to the business, operations, financial condition or
results of operations of such Person and its Subsidiaries taken as a whole;
provided that, with respect to Section 3.1(o) only, in no event shall any
change, circumstance or effect relating to or arising out of (i) the fact or
terms of this Agreement or the Merger; (ii) general economic or market
conditions; or (iii) the real estate development industry generally constitute
a Material Adverse Effect.
(j) "OP Units" shall mean any of (i) limited partnership units
of the OP, (ii) general partnership units of the OP, (iii) Series A Preferred
Limited Partner Units of the OP and (iv) Series B Preferred Limited Partner
Units of the OP.
(k) "Organizational Documents" means, with respect to any
entity, the charter, certificate of incorporation, bylaws, partnership
agreement, declaration of trust or other governing documents of such entity,
including any documents designating or certifying the terms of any security of
such entity.
(l) "Person" means an individual, corporation, partnership,
limited partnership, limited liability company association, trust,
unincorporated organization, entity or group (as defined in the Exchange Act).
(m) "Required Company Votes" means (i) the affirmative vote of
the holders of two-thirds of the total number of outstanding shares of Company
Common Stock in favor of this Agreement and the Merger and (ii) the
affirmative vote of a number of shares of Company Common Stock (excluding the
shares held by Acquiror and its Affiliates) representing a majority of the
total number of outstanding shares of Company Common Stock.
(n) "Required Regulatory Approvals" means all authorizations,
consents, orders and approvals of, and declarations and filings with, and all
expirations of waiting periods imposed by, any Governmental Entity which, if
not obtained in connection with the consummation of the transactions
contemplated hereby, would have a Material Adverse Affect on TIC or the
Company.
(o) "Subsidiary" when used with respect to any party means any
corporation, partnership, limited partnership, limited liability company or
other organization, whether incorporated or unincorporated, any equity
interests of which are owned by such party or by a Subsidiary of such party,
or which is consolidated with such party for financial reporting purposes.
(p) (i) "Tax" (including, with correlative meaning, the terms
"Taxes" and "Taxable") means all federal, state, local and foreign income,
profits, franchise, gross receipts, environmental, customs duty, stock,
severance, stamp, payroll, sales, employment, unemployment disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties, fines and additions to tax imposed with respect to such
amounts and any interest in respect of such penalties and additions to tax,
and (ii) "Tax Return" means all returns and reports (including elections,
claims, declarations, disclosures, schedules, estimates, computations and
information returns) required to be supplied to a Tax authority in any
jurisdiction.
(q) "the other party" means, with respect to the Company,
Acquiror and means, with respect to Acquiror, the Company.
(r) "Third Party" shall mean any Person other than the Company,
Acquiror and their respective Affiliates.
(s) "Trust Shares" shall mean Series A Preferred Securities of
the Trust.
IN WITNESS WHEREOF, the Company and Acquiror have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of February 1, 1999.
TIC ACQUISITION LLC,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Authorized Signatory
IRVINE APARTMENT COMMUNITIES, INC.,
a Maryland corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President